UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education Advanced Level
ACCOUNTING
9706/33
Paper 3 Multiple Choice May/June
Additional Materials: Multiple Choice Answer Sheet
1 hour
Soft clean eraser
Soft pencil (type B or HB is recommended)
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Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.
There are thirty questions on this paper. Answer all questions. For each question there are four possible answers A , B , C and D .
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.
Read the instructions on the Answer Sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
Calculators may be used.
IB13 06_9706_33/4RP
© UCLES 2013
This document consists of 12 printed pages.
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2
1 In calculating the net cash flow from operating activities, which item would be included as an adjustment to profit from operations?
A accumulated depreciation
B bad debts recovered
C bank loan received
D profit on sale of fixed assets
2
A company applies a 20% factory profit to manufacturing cost. Details of its inventory at transfer price are as follows.
$ inventory at 31 May 2012 24 000 inventory at 31 May 2013 36 600
What is the correct treatment of unrealised profit in the income statement for the year ended
31 May 2013?
A
$2100 expense
B
$2100 income
C
$6100 expense
D
$6100 income
3
The following information is taken from the statement of financial position of a company.
$
5% debenture 2019 / 2020 50 000 asset revaluation reserve 10 000 goodwill 20 000 issued ordinary share capital 80 000 long-term loan (repayable 2018) tangible non-current assets (at nbv) retained earnings share premium
45
116
36
16
000
000
000
000
What is the figure for equity to be included in the statement of financial position?
A
$142 000
B
$162 000
C
$182 000
D
$202 000
© UCLES 2013 9706/33/M/J/13

3
4 What is the effect on a company’s statement of financial position of issuing bonus shares?
A
The bank balance will be increased.
B
The non-current liabilities will be increased.
C
The reserves will be reduced.
D
The share capital will be reduced.
5
At the start of the year a company had plant and machinery with a net book value of $160 000.
During the year a machine which had cost $50 000 was disposed of. The sale proceeds were
$60 000 and this resulted in a profit on disposal of $20 000.
The remaining plant and machinery was then revalued at $190 000.
What was the balance on the revaluation reserve at the year end?
A
$40 000
B
$70 000
C
$80 000
D
$90 000
6
The directors of a company carry out the following actions.
1 make an issue of 50 000 ordinary shares of $1 each at par
2 make an issue of 20 000 bonus shares of $1 each at par
3 make a repayment of a debenture of $60 000
Which row shows the effect of these actions on the capital of the company?
A
B
C
D issued share capital non-current liabilities working capital increase decrease decrease increase increase increase no effect decrease increase
© UCLES 2013 9706/33/M/J/13
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4
7
X and Y are in partnership sharing profits and losses equally. The following information is available.
X
$
Y
$ capital accounts current accounts
10% loan
100 000 100 000
(10 000) 5 000
40 000 –
They agree to sell their business to Z Ltd. The terms of the sale are as follows.
1 The assets and liabilities have a book value of $235 000. They are sold at an agreed value of $285 000.
2 X will receive an 8% debenture which pays the same amount of interest as his loan.
3 The balance due to each partner will be paid in shares of $1 each in Z Ltd.
How many shares in Z Ltd will X receive?
A
40 000
B
65 000
C
100 000
D
105 000
8
A Ltd has purchased B Ltd for the total purchase price of $834 000. The purchase consideration being satisfied by: issue of 90 000 6% preference shares of $2 valued at $2.20,
300 000 ordinary shares par value $1 valued at $1.50,
10% debenture (2022).
What is the value of the debenture?
A
$186 000
B
$204 000
C
$336 000
D
$354 000
© UCLES 2013 9706/33/M/J/13

5
9 The summarised statement of financial position of a sole trader shows the following.
$ non-current assets 200 000 net current assets 10 000
210 000 capital 210 000
He agrees to sell his business to X Ltd. The purchase consideration is $260 000 being made up of $60 000 cash
$80 000 debentures and
180 000 ordinary shares of $0.50 each.
Which amount will be credited to the share premium account of X Ltd?
A
$30 000
B
$50 000
C
$90 000
D
$120 000
10
A company buys a new machine.
Which costs are not
allowable as a capital item for the purchase?
1 the cost of additional staff to operate the machine
2 the cost of the machine
3 the cost of additional inventory to use on the machine
4 the cost of a technician to install the machine at the company’s premises
A
1 and 2
B
1 and 3
C
2 and 3
D
2 and 4
11
A company’s year end is 30 June 2012. On 27 July 2012 a major fire took place at the company’s factory. On 8 August 2012 a major debtor at 30 June 2012 went into liquidation.
How should the two events be treated in the financial statements?
fire liquidation
A adjusted in the financial statements adjusted in the financial statements
B adjusted in the financial statements disclosed in notes
C
D disclosed in notes disclosed in notes adjusted in the financial statements disclosed in notes
© UCLES 2013 9706/33/M/J/13
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6
12 Which is deducted before arriving at operating profit?
A
auditor’s
B
debenture
C
directors’
D
distribution
13
The working capital cycle of a business was 100 days in 2012 and 130 days in 2013.
Which statement explains the change?
A
Cash and cash equivalents have increased during 2013.
B
Inventory increased during 2013.
C
The company increased the period taken to pay its suppliers in 2013.
D
Trade receivables decreased during 2013.
14
The following information has been obtained for a company.
$ declared dividend per share market price per share nominal value of shares
What is the dividend yield?
A
1.25%
B
2.50%
15
A company has a high liquidity ratio.
What will reduce liquidity?
C
5.00%
A converting loan stock into shares
B doubling the annual rates of depreciation
C making a bonus issue to existing shareholders
D replacing machinery earlier than planned
0.05
4.00
0.50
D
10.00%
© UCLES 2013 9706/33/M/J/13

7
16 The following information is available for a company for the year ended 31 December.
$ profit from operations finance costs profit before tax
134 000
16 000
118 000 taxation 36 000 retained profit for the year 82 000
Issued ordinary share capital 500 000 shares of $0.50 each.
What is the earnings per share for the year ended 31 December?
A
$0.117
B
$0.164
C
$0.169
17
How does IAS 16 define the fair value of an asset?
D
$0.236
A the amount a buyer will pay for it
B the amount paid to purchase the asset
C the value after deducting an impairment loss
D the value shown in the statement of financial position after depreciation
18
A company with 36 000 shares of $0.50 each in issue has, as its only reserve, a retained profit of
$25 000. The directors then recommend a bonus issue of 1 for 4.
What is the balance on the profit and loss account after the bonus issue?
A
$4500
B
$7000
C
$20 500
D
$25 000
© UCLES 2013 9706/33/M/J/13
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8
19 A company makes three products for which the following details are given. product P
$ product Q
$ product R
$ selling price per unit direct material per unit direct labour per unit
20
9
5
24
12
3
36
15
9
The same material is used by all three products and it costs $3.00 per kilo.
There is a shortage of material.
In which order of priority should the products be made in order to achieve maximum profit from the available material?
A
P Q
→
R
B
Q R
→
P
C
R P
→
Q
D
R Q
→
P
20
A product has the following unit costs.
$ direct materials direct labour variable overheads variable selling costs fixed overheads
14
5
3
1
6
Inventory is valued at marginal cost.
What is the inventory value of 1500 units?
A
$28 500
B
$33 000
C
$34 500
D
$43 500
© UCLES 2013 9706/33/M/J/13

9
21 1500 units costing $2 per unit were input into a process. The normal loss was 20% of the input.
The lost units had a scrap value of $0.40 each.
What will be the cost per unit of output?
A
$1.60
B
$1.92
C
$2.00
D
$2.40
22
A businessman starts trading with a bank balance of $124 000. The budget for the first three months shows the following. month 1
$ month 2
$ month 3
$ cash sales in month 30 000 40 000 35 000 credit sales (terms 30 days) 20 000 22 000 24 000 purchases (terms 60 days) 25 000 28 000 30 000 expenses paid in month 12 000 13 000 64 000
What is the budgeted opening bank balance at the start of month 3?
A
$123 000
B
$158 000
C
$164 000
23
A company has the following budgeted information.
D sales 100 000 units
$189 000 variable costs fixed costs
$350 000
$450 000
Actual sales for the period were 120 000 units.
The company uses flexible budgeting.
What was the total budgeted cost for the period?
A
$800 000
B
$870 000
C
$890 000
D
$960 000
© UCLES 2013 9706/33/M/J/13
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10
24 A company provides the following budgeted information for next month. production 16 875 units raw materials per unit 4 kilos opening inventory of raw materials closing inventory of raw materials
24 000 kilos
28 500 kilos loss of raw materials in production process 10%
What is the budgeted raw material purchases for the month?
A
67 500 kilos
B
70 000 kilos
C
75 000 kilos
D
79 500 kilos
25
840 units of a product are manufactured in a period. 1570 kg of raw material were purchased and used at a cost of $5820. Raw material price and usage variances were $126 F and $235 A respectively.
What was the standard raw material cost per unit of the product?
A
$6.50
B
$6.80
C
$7.06
D
$7.36
26
The standard time for the job is set at 50 hours. The standard direct labour rate is $8 per hour.
The job was completed in 65 hours at a direct labour cost of $455.
What is the direct labour rate variance?
A
$55
B
$55
C
$65
D
$65
27
Which cost is described by the following?
‘costs which should be achieved under efficient conditions, but allowing for normal wastage’
A
basic
B currently attainable standard
C
flexible
D
ideal
© UCLES 2013 9706/33/M/J/13

11
28 A company produces a single product. Each product uses 12 kilos of materials at $0.50 per kilo.
During the month, the company produced 1650 units. It actually used 19 250 kilos at a total cost of $9240.
What was the material usage variance for the month?
A
B
C favourable $264 favourable $275 favourable $385
D favourable $660
29
A company can only invest $1 million in the current period. The table shows five projects. project capital requirement
(current period) $m
NPV
$m
1 1.2 5.0
2 1.0 2.5
3 0.6 1.5
4 0.4 1.2
5 0.4 1.0
Which projects should the company undertake to maximise its shareholders’ wealth?
A
1
B
2
C
3 and 4
D
3 and 5
© UCLES 2013 9706/33/M/J/13
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12
30 A company is considering replacing its fleet of vehicles. The following information is available.
$ purchase price of vehicles annual running costs trade in value of vehicles at the end of year 3
165 000
18 000
60 000
The company’s cost of capital is 8% and the following discount factors apply. year 0 1.000 year 1 0.926 year 2 0.857 year 3 0.794
What is the net present value of the project?
A
$(99 558)
B
$(145 674)
C
$(163 746)
D
$(211 386)
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© UCLES 2013 9706/33/M/J/13